SIC 2874
PHOSPHATIC FERTILIZERS

This category includes establishments primarily engaged in manufacturing
phosphatic fertilizer materials, or mixed fertilizers from phosphatic
materials produced in the same establishment.

NAICS Code(s)

325312 (Phosphatic Fertilizer Manufacturing)

The U.S. Census Bureau estimated that 61 establishments manufactured
phosphatic fertilizers in the late 1990s. In 2000 these companies shipped
$4.2 billion worth of goods, spent $2.7 billion on materials, and employed
7,500 workers. About 62 percent of these establishments had at least 20
employees. The greatest number of phosphatic fertilizer operations was
located in Florida and Louisiana.

Although the original sources of phosphorus for plant fertilization were
guano (bird and bat excrement) and ground bone, a more plentiful source
was found in phosphate rock, which was the only commercially important
source of fertilizer phosphorus in the 1990s. The United States is the
world's leading producer of phosphatic fertilizers. The Kola
Peninsula in Russia is another primary source, and so is Morocco, which
has phosphate rock deposits four times larger than those in the United
States.

After mining, the phosphate rock must be refined and concentrated for use
as fertilizer. Sometimes, finely
ground phosphate rock is applied directly to soil, but usually sulfuric
acid is used to convert it into a more water-soluble form.

About 45 percent of the phosphatic fertilizer produced in the United
States is used on the domestic corn crop, so corn acreage is one
determinant of domestic demand. Other determinants are grain prices, the
ability of U.S. farmers to compete globally, and the weather. Short-term
fluctuations in the domestic market are thus difficult to predict.

In the early 1990s the most widely used of the phosphatic fertilizers was
diammonium phosphate (DAP). During 1991, about a fifth of the 10.7 million
tons of DAP exported by the United States went to India, and nearly half
went to China. Expecting a boom year for the industry in 1992,
manufacturers increased their DAP inventories, but this contributed to an
oversupply of the product as demand slumped in domestic and foreign
markets. Prices fell to the lowest point in nearly 15 years.

From 1994 to 1995 phosphate fertilizer production increased 3.2 percent,
exports increased 10.9 percent, and consumption increased 2.2 percent.
Phosphatic fertilizer shipments peaked at $5.5 billion in 1998, when
demand for phosphates was so strong that much of the inventory warehoused
throughout North America was depleted. The price of two primary raw
materials for DAP (ammonia and sulfur) was low, while the price of DAP was
up until demand for the product dropped because of bad weather and the
usual seasonal slowdown. Government financial aid to farmers and a growing
demand for phosphates in China and India were two of the main reasons for
the strong showing that year.

Nevertheless, some fertilizer manufacturers initiated significant
cost-cutting measures. For example, in the late 1990s one of the
world's largest producers of phosphate fertilizers, IMC Global
Inc., began consolidating its phosphate and potash operations, a move that
included the elimination of hundreds of jobs and the closure of several
mines and processing plants. In addition, IMC Global formed a joint
venture with two of its primary rivals, CF Industries Inc. (Long Grove,
Illinois) and Cargill Fertilizer Inc. (Riverview, Florida), to open a
sulfur remelting facility called Big Bend Transfer Co., LLC, in Tampa,
Florida.

Phosphate fertilizer shipments declined to $4.9 billion in 1999 and
dropped further to $4.2 billion in 2000. The cost of materials increased
to $3.2 billion in 1999, before declining to $2.7 billion in 2000.

IMC Global subsidiary Freeport-McMoRan Resource Partners L.P. (New
Orleans, Louisiana) was one of the leading companies in this industry with
1,000 employees and sales of $957 million in the late 1990s. Another
subsidiary, IMC Kalium (Bannockburn, Illinois) had 2,500 employees and
estimated sales of $600 million. A third subsidiary, IMC-Agrico Co. (Uncle
Sam, Louisiana) had 650 employees and estimated sales of $184 million. It
had previously been known as Agrico Chemical Co.

Among other industry leaders, Cargill had 1,354 employees and sales of
$600 million. LESCO Inc. (Rocky River, Ohio) had 1,244 employees and sales
of $417 million. Mobil Mining and Minerals Co. (a subsidiary of Mobile
Corp. based in Pasadena, Texas) had sales of $161 million. Koch
Agriculture Company Inc. Agri Service Div. (a subsidiary of Koch
Industries Inc. based in Arapahoe, Nebraska) had sales of $150 million.

The Census Bureau reported that this industry employed 7,497 people in
2000, including 5,342 production workers who earned an average hourly wage
of $20.20.